One of the toughest things to deal with when filing Chapter 7 bankruptcy is a reaffirmation agreement. Many times, a bankruptcy attorney will not want their client to sign a reaffirmation agreement. When a person goes through all the trouble to file for bankruptcy, they are given a chance to start all over and even possibly be debt-free. Obligating themselves to anyone financially might take them back to the same situation that caused them to file Chapter 7 bankruptcy. Without signing any agreements, the debtor should be able to eliminate all unsecured debts and secured debts also. They will have to surrender the secured property back to the creditor, but they would no longer have any liability from the debt to that creditor. If a person agrees to sign a reaffirmation agreement while filing bankruptcy and later change their mind, they will be liable for any damages to that creditor. Most of the time, a bankruptcy attorney will advise their client to think carefully on agreeing to any debt at this time.
In most cases, cars, houses and large ticket items fall under the category of secured debt. If the person refuses to sign an agreement the creditor can come repossess the property. The good news for the debtor is, any liability or damages that the creditor seeks will be wiped out in the bankruptcy discharge. So if there are any back payments, physical damage to the property or any costs incurred by the creditor, the debtor will not be responsible for any of it.
Even against the advice of a bankruptcy attorney, many people will decide on agreeing to sign the reaffirmation agreement. The typical excuse is, I need my car. Sometimes people should reevaluate the automobile they drive and the cost of it. If it is in excess, one should consider letting it go and buying something cheaper prior to filing bankruptcy. The downside to a reaffirmation agreement is it blemishes the fresh start that bankruptcy was created for by having the debtor continue on paying on certain debts. All too many times after the bankruptcy filing, the debtor will have buyer's remorse and call the bankruptcy attorney looking for a way out. It's understandable for the reasons of why the debtor would go along with one of these agreements. First of all, everyone knows that in America a person's car and house are an extension of their ego. Giving either of these up, to them is that admission of failure. Because of this, creditors force the issue to keep the people in bondage to their debt.
It seems foolish to go through all that trouble of filing bankruptcy and not use it to the full extent of the law. People filing bankruptcy need to heed to the advice of their bankruptcy attorney as this is not their first picnic. They have seen the reactions of their clients over and over again. This experience gives them the ability to almost foresee the future and the results of that person's bankruptcy filing.
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